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TMI Blog2015 (2) TMI 637X X X X Extracts X X X X X X X X Extracts X X X X ..... to it. - Decided in favour of revenue for statistical purposes. Upfront fee and loans - initial determination of the AO was upset by the Tribunal which held that the fee is to be treated as revenue expenditure - Held that:- the issue is covered by the decision in Commissioner of Income Tax v. Gujarat Guardian Limited [2009 (1) TMI 13 - HIGH COURT DELHI]. This position was not disputed. Accordingly, the finding in the impugned order to this extent is upheld. - Decided against revenue. Pre-operative expenses - revenue v/s capital expenditure - Held that:- The very same issue stands covered by the decision of this Court in CIT v. Modi Industries Ltd.(1992 (10) TMI 74 - DELHI High Court). This has received further endorsement in judgments reported as CIT v. Monnet Industries (2008 (11) TMI 43 - HIGH COURT DELHI ) and CIT v. Relaxo Footwears (2007 (4) TMI 53 - HIGH COURT,DELHI ) thus to be held as revenue expenditure . - Decided in favour of assessee. Software expenditure - revenue v/s capital expenditure - Whether the ITAT was justified in the eyes of law in remitting the mater back to the file of the AO concerning the issue about the claim of the software expenses - Held that:- The q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02-03; ITA No.387/2012 is in respect of AY 2003-04 and ITA No.193/2013 is in respect of AY 2004-05. The questions of law urged are as follows: - (1) Whether the ITAT was justified in the eyes of law in dismissing the appeal of the revenue on the issue of the disallowance of the variable license fee. (2) Whether the Ld. ITAT was justified in the eyes of law in deleting the disallowance of ₹ 1,31,25,000/- made by the AO on account of upfront fee paid by the assessee. (3) Whether the ITAT was justified in the eyes of law in dismissing the appeal of the revenue with regard to the issue of claim of the assessee of expenses amounting to ₹ 3,59,39,412/- incurred on the basic telephone projects in Delhi, Haryana, Tamil Nadu and Karnataka and for verification that they are capital or revenue in nature. (4) Whether the ITAT was justified in the eyes of law in remitting the mater back to the file of the AO concerning the issue about the claim of the software expenses. (5) Whether the ITAT was justified in the eyes of law in dismissing the appeal of the revenue with regard to the disallowance of the interest of ₹ 8,80,36,863/- paid by the assessee. (6) Whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered in Bharti Hexacom (supra). The Court while observing that the claim of licence fee payment was varied w.e.f. 31.7.1999 inasmuch as prior to that it was a fixed amount whereas subsequently it was altered to variable one - held as follows: "The answer to the question would depend upon the finding whether payment related to license fee payable for the period prior to 31.7.1999 or was for the subsequent period. If interest was paid in respect of the license fee payable for the period prior to 31.7.1999, it would have to be crystallized. Similarly, if interest is payable for license fee for the period post 31.7.1999, it should be treated as revenue in nature/character." 5. This Court notices that after recording as above in Bharti Hexacom (supra), the matter was remitted to the Assessing Officer for working out the correct position. Accordingly, we direct the Assessing Officer to work out the correct position and determine whether the allowance claimed is to be capitalized or treated as revenue depending upon the payment period, i.e., before 31.7.1999 or subsequent to it. Question no.6 is answered accordingly. Question No.2 6. This relates to the upfront fee and loans - in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner of Income-tax (Appeals), while sustaining the order of the Assessing Officer, allowed depreciation at the rate of 60 per cent. This resulted in both the assessee and the Revenue being aggrieved. Consequently, cross-appeals were filed by both the assessee and the Revenue. XXX XXX XXX The first issue, in our opinion , has been considered and decided against the Revenue in a judgment delivered by us passed in ITA Nos.1110 of 2006 and 1111 of 2006 titled CIT v. Asahi India Safety Glass Ltd. - since reported in (2012) 346 ITR 329 (Delhi). 9. It is contended that the decision in Amway (supra) was disapproved and impliedly overruled in CIT v. Asahi India Safety Glass Ltd., ITA No.1110/2006, decided on 4.11.2011. In a subsequent decision, Amway India Enterprises (supra) itself was disapproved and over ruled. 10. In the light of the above development, the question of law has to be answered in favour of the assessee. A direction remitting the matter for consideration, affirmed by the ITAT is accordingly set aside. Question No.5 11. The issue of interest disallowance - for the sum of ₹ 8,80,36,863/- (ITA No.1110/2012), ₹ 12,00,42,041/- (ITA No.86/2012), ₹ 1,50,85 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r cannot be faulted. This question is answered in favour of the assessee and against the Revenue. Question No.7 13. The Assessing Officer had not adjudicated on the claim of expenditure for the sum of ₹ 14,05,886/- made in the revised return. The CIT (A) granted the relief to the assessee in the following terms: "15.2 During the appellant proceedings it has been argued by the Ld. A.R. that any return filed within the period described u/s 139 (5) has to be considered. The processing/initiation of the return u/s 143 (1) does not effect the validity of the revised return as the processing/preparing intimation u/s 143 (1) is not an assessment. 15.3 I have considered the issue carefully. The arguments of the Ld. A.R. in this regard are valid and legally correct. Intimation u/s 143 (1) is not an assessment of income under the IT Law and therefore time to file revised return is not curtailed. The A.O. while finalizing the assessment u/s 143 (3) has incorrectly ignored/over looked the revised return filed by the appellant company within the stipulated period u/s 139 (5). In view of these facts the expenses of ₹ 14,05,886/- are held to be allowable as these were wrongly cl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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